Twitter (NYSE:TWTR) shares were down nearly 3% in Wednesday’s early session after Nomura Instinet’s Mark Kelley initiated coverage on the name with a ‘Reduce’ rating. In a note to clients Tuesday, the analyst stated that while his firm sees the social media company as a unique platform with long-term strategic value, it believes that for the time being “stability instead of a reacceleration of growth” will be part of Twitter’s picture. Kelley also said the micro-blogging website will report earnings below expectations next year.
“We view Twitter as a stable and extremely valuable platform…,” Kelley wrote in his note. “However, we see some downside risk to consensus estimates for 2019, particularly to the 1H monetization levels the Street is currently looking for. This, paired with the recent run and current valuation, leaves us expecting a reset to expectations and the stock.”
Kelley estimates Twitter will generate 2019/EPS of $0.82 versus the Street consensus of $0.85. The analyst also set a 12-month TWTR price target (PT) of $31, a number representing 29.14% downside from ticker’s Tuesday $43.75 close.
Meanwhile, other firms covering Twitter have expressed increasing enthusiasm on the name. This morning, Evercore ISI hiked its TWTR price target by 10 points to $42, citing positive conversations on business trends from ad buyers during Q2. Last month, JPMorgan’s Doug Anmuth boosted his price target for Twitter shares to $50, matching the highest PT on the Street. The analyst expects robust long-term advertising growth of at least 20% annually over the next several years from Twitter.
Twitter stock has soared like nobody’s business this year, gaining nearly 80% year-to-date and 126% year-over-year. It hit a 52-wkh of $48.05 in mid-June.
As of writing, TWTR is changing hands at $43.58.